[Sombre]

I've never seen the AI consider supplies. It marches huge armies through multiple wasteland provinces as a matter of routine.

The evidence for this is pretty clear if you play on a large map. Look over the troops in the AI horde that just arrived at your borders. If there are low supply provinces between the AI forts and your border, they will usually be starving and diseased.

In regard to equipment, saying 'the AI is there' is pointless. If you had one AI set to build and assign items totally at random and one AI using the current system, could anyone tell the difference? I doubt it. The only way to judge an AI is the impression it gives human players. It doesn't matter if it thinks about it or does it at random if no-one can tell the difference.